APRIL 15th Is Over – Now What?
If you already filed your return, relax. If your return has not yet been filed, you want to file as soon as you can. This year is almost ONE THIRD OVER! What can you do now to be in top shape for next April 15th? If you haven’t already started a simple way of collecting your important tax papers, begin that new habit today. I started my first job after college working in an office with file folders and filing cabinets. I learned how convenient it was to put things were they belong so you can find them when you want to, when you need a certain document. Whether you are in business or not, all of us who file an income tax return every year need to keep track of only two things. The first of those two things is money in. Can you guess what the second thing is? Yep, it’s money out. In tax return language this means income and deductions. Organization is the key. I have had clients bring me a jumble of receipts. Whether that jumble is in a box or a bag or an envelope, YOU are the one that gets to sort these papers into categories. Why wait until tax day? Get a jump and do your sorting all year long. If you get a paycheck, do you also get a paystub? Every payday put your new paystub on top of last week’s paystub. Then you’ll have your full year’s worth of paystubs in date order. The last stub of the year might be the most important one of them all, but something important could be found sometime during the year, too. Keep them all until after your tax return is prepared just in case your preparer needs to look at them. They could hold a wealth of information for your tax return. If you have pre-tax deductions (mostly medical-related), they have already been deducted before the taxable part of your paycheck was calculated. You don’t get to deduct them again. But you may have other expenses that will be important to your tax return. Do you go to the doctor regularly? Do you have to pay each time you visit? Whether you have a co-pay or you have to pay the full fee for the visit, you will want to keep that receipt. Keep those medical receipts for doctor and dentist visits, prescriptions, eyeglasses, and more, in a file folder or envelope just for medical deductions. Do you own a car? If so, you renew your license plates every year. You may be able to pay for more than one year at a time. Keep that expired registration receipt for the tax year in which you paid that fee. You claim the deduction in the year you pay it, not divided over the number of years to which it applies. And no, your car insurance is necessary, but not deductible. And speeding or parking tickets are not deductible either. What about contributions? I’ll talk about them next week.